Definitions:Standard deviation is a statistical measurement of volatility based on historical returns.Correlation measures how closely two securities' movements are associated, ranging from 1.0 (highly correlated) to -1.0 (inversely correlated).Sharpe Ratio is a measure of risk adjusted returns and is the return less the risk-free rate divided by the standard deviation. Absolute Returns are generally positive returns in any market environment. There is no guarantee that any investment will achieve this objective.

The Arrow Alternative Solutions Fund may not be suitable for all investors. The fund's use of derivatives such as futures, options and swap agreements may expose the fund to additional risks that it would not be subject to if it invested directly in the securities underlying those derivatives. Investing in leveraged instruments will magnify any gains or losses on those instruments. The fund's use of short selling involves increased risks and additional costs. The fund may invest in fixed income securities, which are subject to risks including interest rate, credit and inflation.

Diversification Across Alternative StrategiesArrow Alternative Solutions Fund is a mutual fund that delivers unique risk and return characteristics. Alternative strategies have historically exhibited relatively low correlation to traditional investments, such as equities & bonds. The fund uses a systematic methodology that follows the research of three ProfitScore alternative fixed income strategies: Tactical High Yield, Dynamic Credit Default and Dynamic Government Bond.

The fund optimizes the exposure to each of the underlying directional strategies based on the market environment. The fund seeks to provide a balance of managing risk and seeking absolute returns. Below is a description of each strategy:

Strategy

Exposure

Tactical High Yield

Seeks to provide long or flat (cash) exposure to global corporate high yield markets.

The directional long, short or flat position are based on a series of proprietary indicators that are customized for each specific market segment. The long/short/flat nature of the fund provides the ability for each of the strategies to act independently from one another, providing an additional layer of potential diversification and the ability to respond to changing market and interest rate environments.

Exposure to Multiple Market SegmentsThe Arrow Alternative Solutions Fund’s returns are derived from three core portfolio strategies across distinct market segments: high yield, credit default, and long-term bonds. As illustrated below, each of the three market segments presents different investment characteristics from year to year. Also shown is a long-only blend of all three market segments, using index proxies, based on the fund’s strategy portfolio weights. The potential benefit of using a blend of all three may provide the opportunity for improved risk/return characteristics over time: versus traditional bonds (U.S. Aggregate Bond Index).

2011

2012

2013

2014

2015

5-Year Avg.

StandardDeviation(5 yrs.)

LT Bond 22.84%

High Yield 14.15%

Credit Def. 15.91%

LT Bond 27.48%

U.S. Agg. 0.55%

LT Bond 8.37%

U.S. Agg. 2.68%

Blend 8.85%

Credit Def 11.24%

High Yield 5.93%

Blend 7.16%

Credit Def. 0.54%

Blend 5.59%

Blend 5.16%

U.S. Agg. 7.84%

Blend 11.12%

Blend 3.91%

U.S. Agg. 5.97%

LT Bond -1.59%

Credit Def. 4.58%

High Yield 6.91%

High Yield 5.94%

U.S. Agg. 4.21%

U.S. Agg. -2.02%

High Yield 2.13%

Blend -2.55%

High Yield 4.44%

Credit Def. 7.39%

Credit Def. -4.98%

LT Bond 3.36%

LT Bond -13.88%

Credit Def. 1.55%

High Yield -5.03%

U.S. Agg. 3.25%

LT Bond 13.01%

Performance displayed represents past performance, which is no guarantee of future results. Index performance assumes reinvestment of dividends, but does not include fees. Indexes are not available for direct investment. Index data is shown for illustrative purposes and is not intended to reflect fund performance. Index proxies: High Yield (IBOXX Liquid HY Index), Credit Default (Markit CDX Index), LT Bond (Barclays UST 20+Yr Index). Blended index portfolio (“Blend”) is based on year-end portfolio target weights of the fund (50% IBOXX Liquid HY, 28% CDX, 22% UST 20+Yr), rebalanced monthly. Standard Deviation (a measure of volatility) is based on five year averages through 12/31/2015. Source: Bloomberg/FactSet, calculated by Arrow.

Before investing, please read the prospectus and shareholder reports to learn about the investment strategy and potential risks. Mutual fund investing involves risk including loss of principal. An investor should also consider the investment objective, charges, expenses, and risk carefully before investing. This and other information is contained in the prospectus, which can be obtained by calling 1-877-277-6933 or by clicking here. Please read the prospectus carefully before investing. Arrow Funds are distributed by Archer Distributors, LLC (member FINRA).